Profitability of food producers has increased in 2014 and is expected to remain stable in 2015.

Market performance at a glance

The food and beverage industry is one of the most important sectors of the Hungarian economy. It is the second-largest employer and the third-biggest producer in the manufacturing sector, accounting for more than 10% of total industrial output in 2014. Food export revenues are a significant contributor to Hungary´s overall trade surplus.

In 2014, the food and beverage industry accounted for 7.6% of the total exports, mainly fruit and vegetables, meat products and dairy products, with over 90% of the export destined to countries of the European Union. Over the last five years, the Compound Annual Growth Rate of food exports was 10.7% while domestic sales grew 4.8%.

While profitability of food producers has increased in 2014 and is expected to remain stable in 2015, one of the main challenges for the industry is the overall high tax burden, that dampens household consumption.

The average payment duration in the Hungarian food industry amounts to 60 days. The number of protracted payments, non-payments and insolvency cases has remained stable over the last six months, and no increase is expected in the coming months. However, the food sector´s insolvency rate is above average for Hungary (2.7% in 2014). For example, the insolvency rate of food and beverage producers was 3.5% in 2014. Business failures in the food wholesalers segment increased significantly in 2014. Gearing and dependence on bank finance are generally high in the food sector.

Our underwriting stance remains generally open, as food turnover is expected to increase further and business proftability remains adequate.